Billing Cycle for Credit Card

In simple words, a credit card billing cycle is the period between billing statements. A billing statement is a monthly report of all your spending during this period, the minimum amount due as well as any other additional charges. Depending on your credit card issuer’s policies, the billing cycle can range from 27 to 31 days. 

Let’s understand how a credit card billing cycle works with the help of an example. Let’s say that your credit card statement is generated on the 8th of every month. So, your billing cycle will begin from the 9th of the previous month and go on until the 7th of the current month. All transactions carried out on your card during this period will be reflected in your credit card statement.

Now, let’s explore how credit card billing works. Your billing cycle begins the day your credit card is activated. The outstanding amount will typically be zero, unless you have any upfront charges or joining fees due. In case you choose to transfer balance from an existing credit card account to this card, that amount will be added to your outstanding balance as well. 

Your credit card outstanding balance due date will typically be between 15 and 25 days after the generation of your billing statement. The exact date may vary depending on the credit card issuer. Let’s say that your credit card statement was generated on the 15th, then your credit card bill payment will likely be due on any date from 30th to the 10th of that month.

The minimum amount due is the amount that you need to pay in order to avoid being penalised by your credit card issuer. This amount will be calculated as a percentage (generally 5%) of the total amount due. 

Let’s take a look at an example to understand minimum amount due: 

• Total outstanding amount: ₹15,000
• Minimum amount due: ₹750 

So, in case you’re not able to pay the entire amount, you can always choose to pay the minimum amount due. However, remember that interest will accrue on the remaining outstanding balance. 

Here are some important things to keep in mind about your credit card billing cycle to ensure that your credit card experience is smooth and stress-free: 

• The billing cycle can vary from one credit card issuer to another and at times, from one credit card variety to another. 

• Make sure to check your credit card issuer’s policies to understand your billing cycle better. 

• Ensure that you settle your dues, whether it’s the minimum amount due or the total outstanding balance within the due date. This will help you avoid late payment fees and scrutiny from your credit card provider.

Your credit card usage habits can affect your credit score considerably. Most credit card issuers report your account details to credit bureaus periodically, generally every three months. In case you have missed any payments, this will be reported and will likely drive your credit score down.